Securing a loan against property for a business start-up is relatively simple as compared to other financing solutions. This is because you do not have to showcase a high turnover and possess a business vintage for the former. However, with several loan against property defaults, and after CIBIL’s word of caution to lenders, you can expect stringent application terms today. To ensure that this doesn’t affect your application, take the following 3 tips to obtain a loan against property for your start-up.
Pledge A Property That Is Litigation-free And Has Good Market Value
Before approving of your loan against property or mortgage loan for business, lenders will inquire into the legal status of your asset. When you make use of this kind of loan, you promise to, at worst, forego ownership in case you cannot repay your loan. So, in order to leverage the market value of your property, ensure that you can claim ownership of it and that it is free of legal entanglements.
When you opt for a loan against property for a business in India, you will obtain funding up to 70% of the market value of your asset. This amount ranges with different banks and financial institutions. The amount runs up to Rs.3.5 crore on a Bajaj Finserv Loan Against Property. While a new, well-kept or renovated property will help you secure a generous amount, an old, run-down, dilapidated property may cause your application to get turned down. At the very least, it may imply a reduced principal and shortened tenure.
Build Your Credit Score Or Apply Jointly With A Creditworthy Co-applicant
While evaluating your loan application, lenders also assess your financial profile. This is done to determine whether you will be able to make repayments or not. Lenders look for a credit score of around 750 coupled with a credit report that does not show a history of defaults. As you plan to apply for the loan, work towards improving your credit score by being faithful to bill payments and EMIs you may be servicing.
In case you need financing urgently and cannot meet your lender’s financial criteria, consider partnering with an individual who has a high credit score. This person could be a family member, a friend, or even a business partner. This is because lenders will be happy to offer you a loan against property for your business start-up when you apply with a creditworthy co-applicant.
Meet Your Lender’s Eligibility Terms And Produce The Supporting Documents
A necessary measure to take when applying for your loan is to check your preferred lender’s eligibility criteria. While a valuable property and a good credit score will help you clear most of the terms, you still have to meet your lender’s income and age criteria. Most lenders will have minimum monthly salary and maximum debt-to-income ratio requirements.
Additionally, lenders also specify minimum and maximum age limits for availing a loan. If you are too young then repayment may not be assured and if you are elderly, the lengthy tenure may outlive your earning days. Finally, every lender will ask you to support your application and prove your eligibility by furnishing documents like ITR, bank statements, address proof, Aadhaar card and property papers.
As you check off all the eligibility terms and get the documents ready, check your pre-approved loan offer from Bajaj Finserv. A single-step verification will simplify the application process by giving you instant approval and a chance to apply via a customised deal. This will help you secure funds for your start-up easily and quickly.